Atal Pension Yojna (http://goo.gl/Rs9Xqi ) was announced in Budget 2015-16 as an upgrade to the Swavalamban scheme, which will now fold into the new defined benefit pension scheme for the poor. The pension fund regulator will administer the scheme, which is open to all unorganized sector workers who currently do not avail of any social security scheme and have a bank account. Why this scheme? To give clarity of future benefits to the subscribers—something that was missing in the Swavalamban scheme, says a government note. This is an analysis of the product. Spoiler alert: ‘regressive’ is the word that comes to mind.
Does finance benefit society? The answer is: It depends. The answer depends on who is asking the question. Ask the average person in a living room in India and the answer will be a resounding no. Households prefer real assets such as gold and real estate to financial products. They have good reason to distrust finance due to fraud and episodes of institutional cheating of household savings—either through rules that work for the companies or due to financial repression that sees purchasing power melt away because of inflation. Another reason why individuals distrust the financial sector is due to the mismatch between what the priests of high finance do and what they earn. Just for trundling money around and then losing a lot of it for us, why should these guys be paid millions is a question that’s often asked. Of course, it does not prevent the same individual from encouraging his kid to join high finance. After all, the money and the good life is there.